Submitted By:

ABHISHEK SRIVASTAVA
BEENA VENUGOPALAN
JOTINDER SINGH
NISHANT DHORELIYA
RADHA A
SOUBHAGYA RATH
YOGESHWAR DUTT

002
012
022
032
042
052
062

EXECUTIVE SUMMARY
Nestl India is a subsidiary of Nestl S.A. of Switzerland. With six factories and a large
number of co-packers, Nestl India is a vibrant Company that provides consumers in India
with products of global standards and is committed to long-term sustainable growth and
shareholder satisfaction. The company is known for its brands in the Milk Products &
Nutrition, Prepared Dishes & Cooking Aids, and Chocolates & Confectionery segments.
Nestl leads the value sales of noodles in India with a market share of 79.3%. A testament to
Nestl's domination of the sales of plain noodles is the fact that for its instant noodles brand
Maggi, among all its global offices, India accounts for the highest level of volume sales for
the company.
This marketing plan analyses the current marketing mix of Maggi Noodles, studies the
popularity of the two new health variants Vegetable Atta and Dal Atta Noodles and makes
suggestions with regard to introducing a new brand Cup O Maggi in the cup noodles
segment. Various tools like surveys and secondary sources of information have been utilized
for the purpose of this analysis.

TABLE OF CONTENTS
2. SITUATION ANALYSIS..................................................................................................... 5
2.1 Market Summary............................................................................................................ 5
2.1.1 TARGET MARKETS ........................................................................................... 5
2.1.2 MARKET DEMOGRAPHICS ............................................................................. 5
2.1.3 MARKET NEEDS ................................................................................................. 6
2.1.4 MARKET TRENDS .............................................................................................. 6
2.1.5 MARKET GROWTH............................................................................................ 8
2.2 SWOT............................................................................................................................ 10
2.3 COMPETITION........................................................................................................... 11
2.3.1 TOP RAMEN ....................................................................................................... 11
2.3.2 ITC SUNFEAST PASTA .................................................................................... 11
2.4 CURRENT MAGGI NOODLES BRAND................................................................... 12
IDENTITY/KAPFERERS PRISM................................................................................... 12
2.5 PRODUCT OFFERING .............................................................................................. 13
2.6 PRODUCT DISTRIBUTION ...................................................................................... 13
2.7 KEYS TO SUCCESS.................................................................................................... 14
2.7 CRITICAL ISSUES AND CHALLENGES ................................................................ 14
3. MARKETING STRATEGY............................................................................................. 15
3.1 MISSION...................................................................................................................... 15
3.2 MARKETING OBJECTIVES ..................................................................................... 15
3.3 INDUSTRY SEGMENTATION .................................................................................. 16
3.4 TARGET SEGMENTS FOR MAGGI NOODLES ..................................................... 22
3.4.1 MAGGI 2 MINUTE NOODLES ........................................................................ 22
3.4.2 MAGGI CUP O NOODLES ............................................................................... 23
3.5 POSITIONING OF MAGGI ....................................................................................... 23
3.5.1 MAGGI 2 MINUTE NOODLES ........................................................................ 23
3.5.2 CUP O MAGGI.................................................................................................... 23
4. MARKETING MIX .......................................................................................................... 24
4.1 CONSUMER SOLUTION ........................................................................................... 24
4.1.1 IMPROVING THE DAL ATTA VARIANT..................................................... 24
4.1.2 NEW PRODUCT: THE CUP-O-MAGGI ......................................................... 24
4.1.3 PACKAGING ...................................................................................................... 24
4.2 CONSUMER COST ..................................................................................................... 25
4.3 CONVENIENCE.......................................................................................................... 26
4.4 COMMUNICATION.................................................................................................... 27
4.5 MARKETING RESEARCH ........................................................................................ 28
5. FINANCIALS .................................................................................................................... 31
5.1 BREAKEVEN ANALYSIS OF A 100 TONNE CAPACITY PLANT OF CUP O
MAGGI NOODLES ........................................................................................................... 31
5.1.1 BREAK-EVEN ANALYSIS................................................................................ 31
FINAL TOTAL COST ANALYSIS ............................................................................ 33
5.1.2 ANALYTICAL BREAK-EVEN ANALYSIS.................................................... 33
5.1.3 GRAPHICAL BREAK-EVEN ANALYSIS ...................................................... 34
5.2 SALES FORECAST..................................................................................................... 34
APPENDIX A: INDIAN INSTANT NOODLES MARKET GROWTH GRAPHS ........ 36
APPENDIX B: NESTLE MAGGI NOODLES FORECAST RETAIL SALES .............. 37

1. INTRODUCTION
Ever since its launch in India in 1983, this brand has become synonymous with noodles. The
bright red and yellow colours of the packet with the brilliant blue 2-minute Noodles
printed on it has found a place on every kitchen. Over the years, Maggi has grown as a brand
and positioned itself as a Fast to cook! Good to Eat! food product.
The history of this brand traces back to the 19th century when industrial revolution in
Switzerland created factory jobs for women, who were therefore left with very little time to
prepare meals. Due to this growing problem Swiss Public Welfare Society asked a miller
named Julius Maggi to create a vegetable food product that would be quick to prepare and
easy to digest. Julius, the son of an Italian immigrant came up with a formula to bring added
taste to meals in 1863. Soon after he was commissioned by the Swiss Public Welfare Society,
he came up with two instant pea soups & a bean soup- the first launch of Maggi brand of
instant foods in 1882-83.Towards the end of the century, Maggi company was producing not
just powdered soups, but bouillon cubes, sauces and other flavourings.
However in India (the largest consumer of Maggi noodles in the world!) it was launched in
1980 by Nestle group of companies. Maggie had merged with Nestle family in 1947.
When launched it had to face a stiff competition from the ready to eat snack segments like
biscuits, wafers etc. Also it had other competitor the so called home made snacks which are
till today considered healthy and hygienic. Hence to capture the market it was positioned as a
hygienic home made snack, a smart move. But still this didnt work, as it was targeted
towards the wrong target group, the working women.
After conducting an extensive research, the firm found that the children were the biggest
consumers of Maggi noodles. Quickly a strategy was developed to capture the kids segment
with various tools of sales promotion like pencils, fun books, Maggi clubs which worked
wonders for it. No doubt the ads of Maggi have shown a hungry kid saying Mummy bhookh
lagi hai to which his mom replies Bas do minute! and soon he is happily eating Maggie
noodles. Further the MAGGI 2-MINUTE Noodles has been renovated to provide 20% of the
RDA 1 of Calcium and Protein for the core target group building on the nutrition proposition
Taste bhi health bhi. The company could have easily positioned the product as a meal, but
did not, as a study had shown that Indian mentality did not accept anything other than rice or
roti as meal. They made it a easy to cook snack that could be prepared in just two minutes.
The formula clicked well and Maggi became a brand name.

Recommended Dietary Allowances for children of 79 years as per Nutritive Value of Indian Foods, published by Indian
Council of Medical Research, Reprinted 04.

2. SITUATION ANALYSIS
Nestls Maggie noodles is the leading brand in the instant noodles segment in India, enjoying
a market share of 79.3%. The brand has grown to an estimated Rs 200 crore & contributes to
around 10% of Nestle Indias top line. Being the pioneer in the noodles market has given it a
first movers advantage over other brands. Maggi has regularly come up with new flavours
and has recently launched two variants- Vegetable Atta and Dal Atta noodles, catering to the
increasing demand for healthy snacks.

2.1 Market Summary

2.1.1 TARGET MARKETS
Primary target: Children (<16)
Nestle plans to widen its target audience by launching new variants Vegetable and Dal atta
noodles for health conscious people.
2.1.2 MARKET DEMOGRAPHICS
Demographics:
Region: urban, semi-urban, rural (recent)
Occupation: Housewives, working professionals, self-employed
Sex : Unisex
Income: 1,20,000 p.a. upwards
Social class: Middle and upwards
Family life cycle: Young, single, married with children.

Behavioural:
Occasions: Regular, Everyday user-urban, rural-depends on the temporal aspects of the
consumers life(varied usage in terms of time of time of day, week, month, year)
User status: first time user-rural, potential users-semi-urban, heavy users-urban
Usage rate: Heavy user-urban, light-rural, medium-semi-urban
Loyalty status: hard core and shifting loyals
Buyer-Readiness Stage: rural-some are aware, semi-urban:some intend to buy(aware,
informed),urban: informed(some desire,some intend to buy)
Attitude toward product: Enthusiastic, positive
Psychographics:
Lifestyle: Hard pressed for time

2.1.3 MARKET NEEDS

The urban Indian is used to having his dinner late from around 8:30 pm to as late as 11 pm.
Hence a convenient snack between lunch and dinner is an often exercised option. In rural
areas, smaller priced packs stimulates demand.
Maggi is a fun and convenience brand which sits strongly in its position as a "good to eat, fast
to cook" anytime snack and is popular across different age groups. Opportunities in
practically all consumption categories arise in terms of "reach" and "medium of
consumption". Hence the onus is on the company to make it easily available and affordable
and in different sizes, catering to different categories of users like the new Maggi chota pack
conveniently priced at Rs 5 for 50gms. The Indian palate is not too adventurous in terms of
trying out new flavours.In fact today, Maggi have settled at standard flavours such as curry,
masala, tomato and chicken and not much experimentation is necessarily required in the
noodles market. People prefer to have it easily available and affordable.

2.1.4 MARKET TRENDS

The FMCG market is set to treble from US$ 11.6 billion in 2003 to US$ 33.4 billion
in 2015.

Penetration level is only 30% for Maggi Noodles in urban areas as well as per capita
consumption for the Instant noodles and pasta segment is low indicating the untapped
market potential.

Population 2005-06 (mn household)

Population 2009-10 (mn household)
% Distribution (2005-06)
Markets (Towns)
Universe of Outlets (mn)

Urban
53
69
28
3,758
1

Rural
135
153
72
62,700
3.3

Urban profile
Source:Statistical Outline of India (2005-2006)

Burgeoning Indian population, particularly the middle class segments and the rural
segments, presents an opportunity to makers of branded products to convert
consumers to branded products.

Growth is also likely to come from consumer 'upgrading' in the matured product
categories.

At 4% constant value CAGR into the forecast period, value growth for packaged food
is predicted to remain healthy. Growth will continue to be fuelled by convenience
products such as noodles and ready meals with 200 million people expected to shift to
processed and packaged food by 2010

Manufacturers are introducing low-priced goods in smaller pack sizes. As a result, the
rural marketing efforts have pushed the demand for sachets in many consumer goods

markets. Priced at Rs0.50-1.00, sachets have proved to be extremely popular in

smaller towns and villages, where households cannot afford to buy larger packs due
to financial constraints.

Consumption pie
Source: KSA Technopak Consumer Outlook 2004.

An average Indian spends around 40 per cent of his income on grocery products.

Population (millions)
Population <25 years of age
Urbanisation %

1996
846
480
26

2001
1,012
546
28

2006
1,087
565
31

Consumer Profile
Source: Statistical Outline of India (2005-2006)

Rapid urbanisation, increased literacy and rising per capita income, have all caused
rapid growth and change in demand patterns, leading to an explosion of new
opportunities. Around 45 per cent of the population in India is below 20 years of age
and the young population is set to rise further.

While instant noodles are still not generally consumed as main meals in India, more
individuals are bucking this trend and accepting them as an option. This is, however,
mostly restricted to busy working adults who live independently or only with their
spouse, away from their parents, and who have little time to prepare their own meals
at home. Given the requirements for convenience and saving time, these individuals
resort to easy-to-prepare meals, such as instant noodles.

Increased health consciousness and abundant production of quality soyabean also

indicates a growing demand for soya food segment.

1200
1000
800
600

Incom e (US
$/annum )

400
200
0
2003 2015

Rise in disposable income (US$/annum)

Source:Euro monitor, BRICs Report (Goldman Sachs)

The BRICs report indicates that India's per capita disposable income, currently at
US$ 556 per annum, will rise to US$ 1150 by 2015 -another demand driver. Spurt in
the industrial and services sector growth is also likely to boost the urban consumption
demand.

Only about 8-10 per cent of output is processed and consumed in packaged form, thus
highlighting the huge potential for expansion of this industry. Currently, the semi
processed and ready to eat packaged food segment has a size of over US$ 70 billion
and is growing at 15 per cent per annum.

FICCI Federation of Indian Chambers of Commerce and Industry has predicted an

overall growth of culinary products/snack food (10%)

2.1.5 MARKET GROWTH

General growth of the Indian Noodles sector FY 2005-2006
FICCI states that the culinary products and snack category, under which Maggi
noodles is classified, has had a robust growth of 8%.

Growing by a more than robust 21% in current value and 16% in volume, growth in
noodles will be among the fastest in the various packaged food products in India.
(Refer Appendix A: Indian Instant Noodle Market Growth Graphs)

Current value sales of noodles in stood at slightly over Rs 9 billion, with pouch
instant noodles accounting for more than 66% of the total value sales.

Growth of Maggi Noodles FY 2005-2006

For the FY 2005-2006, the growth of Maggi noodles was an impressive 15%, with
sales at Rs 6.75 billion and profit at Rs 2 billion.

Maggi Market Share in Instant Noodles

Category

Market Share (%)

79.5
79
78.5
78
77.5
77
2000

2001

2002

2003

2004

2005

2006

Maggi Market Share in Instant Noodles Category (2000-2005)

Source: Euromonitor International Packaged Food in India May 2006

It has maintained a market share of around 78% despite increasing competition.

The relative performances of the Maggi variants has been presented using the BCG
matrix

The Boston Consulting Groups

Growth-Share Matrix
STARS

QUESTION MARKS

( MAGGI Veg Atta Noodles)

(MAGGI Chicken, Dal Atta

Noodles)

CASH COW

DOGS

(MAGGI Masala flavour)

(MAGGI Tomato, Curry

flavours)

High

Market
Growth
Rate
Low

Low

High

Relative Market Share

2.2 SWOT
Strengths

Weakness

Strong brand recall and the product is

almost eponymous to the brand.
Market leader with 79.3% market
share in terms of value.
Highest advertising share(72% (TV
AdEx 2004-05)).
Emotional relationship with the
consumer.
A strong distribution network of the
parent company Nestle.

Opportunities

The instant noodles segment is

projected to grow at a tremendous
rate with the market size doubling by
2010.
Increase in the potential consumer
base i.e. single working professionals
and student population
Rapid economic growth and rising
disposable incomes make a strong
case for a premium brand like Maggi.
Upward trend of convenience food
consumption.
Huge untapped serviceable upward
class rural base.

Tagged as a product having no health value.

It has tried to bring in innovation but has
failed.(Dal Atta Noodles refer survey
noodles).
The product features have remained almost
constant since inception in 1983 with any
trial of innovation misfiring.
Market share has fallen from the 80% in
1998-99 to 79.3% in 2005-06.

Threats

Competition is increasing with established

competitors in other segments are foraying
into the noodles segment seeing the
capacity of growth.
Top ramen the prime competitor has come
up with new exciting instant noodle
offerings like cup noodles and mug noodles
which threatens to eat into Maggis market
share.
Foreign players like Wai Wai and Rum
Pum have forayed into the noodles market
and have made their brand presence in
eastern markets while indigenous
Parle is threatening to offer their
distribution network to international noodle
brands wishing to make an entry.
Top Ramen has repositioned itself on a
health platform with a new baseline Get on
Top fortifying its product with calcium and
vitamins.
The product as priced higher than its main
rival Top Ramen.

2.3 COMPETITION
2.3.1 TOP RAMEN

'Don't be a noodle, be a Smoodle,' was the ad that brought the Top Ramen brand into
limelight when it was launched in 1991.
Market share FY 2005-2006: 14%
Variety:
a) Packet Noodles: Macho Masala, Funky Chicken, Oye Tomato, Curry Smoodles.
b) Cup Noodles: Spicy Vegetable, Tangy Chicken
Packaging and Pricing:

Top Ramen
Packet Noodles

Cup Noodles

Pack Size
(gm)
50
100
400
80

Price
(Rs)
5
10
34
20

Distributor: Marico Industries

Distributor strength: About 130000
USP: 'Don't be a noodle, be a Smoodle,' innovative flavours and its cup noodles

2.3.2 ITC SUNFEAST PASTA

ITC launched India's first instant pasta snack, Sunfeast Pasta Treat in 2005. Made from high
protein Durum wheat, Sunfeast Pasta Treat is not fried and does not contain maida, making it
a nutritious snack. This ready to cook pasta comes with a sauce maker inside the pack.

Market share FY 2005-2006: The ready-to-eat Sunfeast Pasta Treat has clocked 6% of the
branded noodles volume in just one year.
Variety: It is currently available in four exciting flavours: Masala, Tomato and Cheese, Sour
Cream Onion and Cheese.
Pricing: priced at Rs. 12/- for the Masala flavour and Rs.15/- for Tomato and Cheese, Sour
Cream Onion and Cheese.
Packaging: Each pack is an 83 gm pack with a 15 gm sauce maker
Distributor: ITC Limited
USP: Sunfeast is made from durum wheat and is promoted as a healthy alternative to instant
noodles made from the less healthy maida (a type of wheat flour that is slightly lower in
quality).

2.4 CURRENT MAGGI NOODLES BRAND

IDENTITY/KAPFERERS PRISM
Personality
Playful children,
Hurried youth

Physique
Yellow packaging,
Tasty

Relationship
Fast to cook and good to
eat,
Mummy bhookh lagi,
Taste bhi health bhi

Reflection
Family oriented
Fun-loving

Maggi Noodles

Culture
Family,
Dual Income,

Self Image
Kid,
Independence

2.5 PRODUCT OFFERING

Maggi Noodles comes in 4 variants:
1. MASALA: This is the original and most widely liked flavour of Maggi and hence has
been brought out in 6 different packaging sizes; the maximum in any variant
2. CHICKEN
3. CURRY
4. TOMATO
5. VEGETABLE ATTA NOODLES: Launched in April 2005, this variant had
contributed to 11 per cent in value to the instant noodle category within 7 months
of its launch; this was the beginning of the Taste bhi Health bhi focus
6. VEGETABLE DAL ATTA NOODLES: Continuing the healthy snacks trend, this
variant was launched in May 2006.
Pack Size
(gm)

MAGGI 2 Minute Noodles

Masala

50
100
200
400
600
800
Chicken
100
Curry
100
Tomato
100
Vegetable Atta Noodles
100
400
Vegetable Dal Atta Noodles
100
400
Variants, Packaging, Prices

Price
(Rs)
5
10
20
38
54
72
10
10
10
13
50
13
50

Source: Nestle India

2.6 PRODUCT DISTRIBUTION

Maggi Noodles is being sold through 2,60,000 outlets (FY 2005-2006), which comprise of
grocers, convenience stores, supermarkets and miscellaneous channels. The average Indian
still prefers shopping through the traditional grocers or kiranas as can be inferred from the
higher distribution of 62.8%.The rising popularity of the mall-culture in the urban and
semi-urban areas also reflects on the slight increase in distribution through supermarkets /
hypermarkets.
Channel
Traditional grocers
Convenience stores
Supermarkets/hypermarkets
Others
Overall

2005
63.0
20.0
16.6
0.4
100.0

2006
62.8
20.0
16.8
0.4
100.0

India Dried Pasta & Noodles off-trade distribution channels, by value, 2005-2006 (%)
Source: Denis Mason, Datamonitor

2.7 KEYS TO SUCCESS

Maggi has had the first mover advantage with respect to the Instant noodles segment
in the Indian market.
Continued innovation in terms of flavours and themes from an ordinary 2 minute
bite to a healthy snack.

2.7 CRITICAL ISSUES AND CHALLENGES

To sustain its growth and maintain its position as the leader in the Instant Noodles
segment: Nissins Top Ramen and recently ITCs Sunfeast pasta have been eating
into Maggi Noodles market share of the Instant Noodles Market.

To be increasingly viewed as the preferred snack of Indians.

3. MARKETING STRATEGY
3.1 MISSION
To be considered as the number one snacking option of India combining the values of
convenience, taste and health.

3.2 MARKETING OBJECTIVES

Increase value market share to 80% in the instant noodles market by 2007-08 from
the current 79.3%.
To promote Maggi noodles as a healthy ready to eat convenient food among mothers
and single working professionals.
To provide line extension by introducing Cup Noodles/Mug Noodles.
To upgrade the existing product features viz. packaging, ingredients, special additives
based on consumer feedback.

The objectives were arrived at based on the analysis of Ansoffs Grid.

ANSOFFS PRODUCT/MARKET EXPANSION GRID

Existing products

Existing
Markets

New
Markets

New products

MARKET PENETRATION

PRODUCT DEVELOPMENT

( Upgrade existing variants of

MAGGI)

(Introduce new variants of

MAGGI)

MARKET DEVELOPMENT

DIVERSIFICATION

(Finding new markets for

existing variants of MAGGI)

(Launch totally new variants of

MAGGI in totally new markets)

3.3 INDUSTRY SEGMENTATION

The taste preferences and eating habits of consumers bear a high correlation with their
age. Based on this, we can segment the market into the following age groups:
1990

1995

2000

169,999 181,521 187,940

Children: (2-9 years old)
89,781
100,560 109,302
Tweenagers: (10-14 years old)
120,293 127,645 142,432
Teenagers: (13-19 years)
80,812
85,918
92,074
Studying Age: (18-22 years old)
230,839 249,149 270,576
Young Adults: (15-29 years old)
243,295 277,343 316,065
Middle-Aged Adults: (30-59 years old)
134,212 151,646 174,986
Baby Boomers: (40-59 years old)
57,029
65,643
75,712
Pensioners: (aged 60+)
Age wise break up and forecast of the population
Source: UN census data, Euromonitor database

2005

2010

2015

189,211
114,583
153,781
103,179
294,103
358,164
202,754
86,585

184,457
117,137
160,728
110,642
319,267
398,405
232,801
99,728

184,376
114,226
162,495
115,126
336,193
440,655
261,349
117,168

Age wise break up of the population (2005)

86,585

189,211
Children: (2-9 years old)

202,754
114,583

Tweenagers: (10-14 years old)

Teenagers: (13-19 years)
Studying Age: (18-22 years old)

153,781

Young Adults: (15-29 years old)

Middle-Aged Adults: (30-59 years old)

358,164
103,179

Baby Boomers: (40-59 years old)

Pensioners: (aged 60+)

294,103

Agewise Breakup of Population, 2005

1) CHILDREN
Children as an age group are a marketers delight. With pester power children play a
significant role in decision making and purchase choices of just about anything ranging from
food items to beverages to chocolates. As consumers, children know exactly what they want
and do not experiment too much with flavour or colour.
Children rule
Indian families consider children to precious gifts of God, and parents in all income groups do
all they can for their offspring. Indian parents are still not completely comfortable with paid

baby sitters or day care help and use the larger extended family or friends to help with care
and supervision of children.
Rush for pre-school admissions
Throughout urban India, parents of nursery age children are looking to send them in the best
private school they can afford. Pre-schools for toddlers in the 2-3 age group are mushrooming
all over the country, as anxious parents recognise the perceived benefits these can bring.

'000
Male
Female
TOTAL
as % of
total
population

1990
87,953
82,046
169,999
20.29

1995
93,797
87,724
181,521
19.67

2000
97,055
90,885
187,940
18.63

2005
97,624
91,588
189,211
17.37

2010
95,041
89,416
184,457
15.82

2015
94,897
89,478
184,376
14.88

Children (2-9 years old) 1990-2015

Source:Euromonitor International from national statistics and UN
2) TWEENAGERS
The tweenagers age group consists of children on the threshold of adolescence and as a
segment are a difficult lot. Though they are not sure about their choices on an emotional
plane, they are a trendy new group that is extremely savvy and self assured when it comes to
taking decisions regarding consumer goods and wants. Urban children in this age group
would have some amount of pocket money with an upper limit of Rs100 per month. Though
allowances have gone up, parental control still exists over this market segment. Impulse foods
rule the preference scale as far as the buying behaviour of tweenagers in India is concerned.
In fact, the top six expense items for tweenagers seem to be impulse foods: 17% of the total
pocket money spent on ice creams, 12% on chocolates and 10% each on soft drinks and fast
food according to a newspaper report in the The Times of India.
A key role to play in decision making
With increased awareness through television and advertising, tweenagers are an important
influence on family decision-making in urban India. They have also mastered the art of
nagging their parents into making purchases of gadgets or products that they want. Among the
areas where they make their influence felt are the purchase of such items as a newly launched
chocolate bar, instant noodles and breakfast cereal.
With a penchant for hi-tech and an ease with new technology far superior to their parents,
these tweenagers are more familiar with operating mobile phones, the TV remote, DVD
player and computer programmes, as well as the product features.
Cricket-crazy boys
Cricket is the obsession and passion of boy tweenagers in India. This interest cuts across
income and socio-economic groups. Low income boys will play on the streets with makeshift
bats and stumps, middle-income children can be seen playing in gardens and at school, while
boys from more well-to-do families go and play in organised coaching camps. With their
education demanding less time at this age, parents are generally quite happy to see their boys
spending so much time on cricket.

Lifestyle concerns in urban India

A 2005 study of 10-16 year olds in urban India revealed a sedentary lifestyle among 72% of
the 20,000 children sampled by Lifetime Wellness Rx Ltd in the cities of Allahabad in the
north and Hyderabad in the south. Of those sampled, 52% of children showed a risk of
developing chemical dependence, with the problem probably attributable to a scarcity of
playgrounds and too much TV viewing.
Even television channels are zeroing in on this segment in recognition of this fact. There is
nothing subtle about the age group any more. They like to hear it straight and then make their
independent choices and judgements. On the flip side, they are becoming increasingly
vulnerable to media blitzkrieg.
'000
Male
Female
TOTAL
as % of
total
population

1990
46,682
43,098
89,781
10.71

1995
52,240
48,320
100,560
10.90

2000
56,672
52,630
109,302
10.84

2005
59,329
55,254
114,583
10.52

2010
60,571
56,565
117,137
10.04

2015
58,960
55,266
114,226
9.22

Tweenagers (10-14 years old)

Source: Euromonitor International from national statistics and UN
3) TEENAGERS
On the brink of adulthood, teenagers like to emphasize and express themselves in a manner
that catches attention. They have experimental with their food with a preference towards
innovative offerings but form strong opinions which they carry forward in life. They are also
predisposed towards snack items as they tend to feel hungry between traditional meals. They
have a lot of say about the food that they want to consume with limited parental control.
Mobile phones
This is the mobile phone generation in India. They are completely at ease with new
technology and are heavy users of value-added services like SMS, ring tone downloads and
cricket score updates. Most still depend on their parents for pocket money but are heavy users
of these services. In many urban, middle-income households teenagers are now given a prepaid SIM card with a certain value for the month, in addition to allowances for travel and
entertainment.
Hard pressed for time
Teenagers like buying books, music and expensive branded footwear, as well as watching
films and socialising with friends. Older college-going teenagers high school pupils tend to
frequent coffee bars, which are a relatively new focal point for socialising. Teenagers are also
among the regular users cinema multiplexes and entertainment zones.
This age group is extremely conscious of their facial and physical looks. They are expected to
fuel demand for skin care products as well as health and nutrition-related goods. Urban
teenagers are far more socially active today and find some difficulty in balancing their school
routines with their personal schedules.

'000
Male
Female
TOTAL
as % of
total
population

1990
62,853
57,440
120,293
14.35

1995
66,433
61,212
127,645
13.83

2000
74,027
68,405
142,432
14.12

2005
79,765
74,017
153,781
14.12

2010
83,246
77,482
160,728
13.78

2015
84,033
78,462
162,495
13.11

Teenagers (13-19 years old)

Source: Euromonitor International from national statistics and UN
4) STUDYING AGE
A rise in the number of colleges and institutions of higher learning both government owned
and privately financed has enabled a larger number of youth to graduate from their portals.
This population grew since 2000 but is set to stagnate in the forecast period with couples
actually postponing the child bearing decision and some even rejecting the idea of having one
at all. This age group has taken up to snacking as a way of life as they keep missing regular
meals due to erratic schedules. They have longer waking hours and due to this the traditional
three meals does not suffice with the need for filling snacks.
Rising financial freedom
With growing aspirations on the academic front and shrinking global boundaries this age
group has an unquenchable thirst for information whether through their PCs or cell phones.
With a rise in employment opportunities in the Business Process Outsourcing (BPO) sector,
more and more consumers in this age group are juggling jobs along with their studies for the
sake of the financial freedom it gives them.
Summer jobs
Until the 1990s, summer vacations were a time to relax, read and catch up with friends. This
is no longer the case. Now, teenagers either find a summer job, or undertake activities such as
a trek in the mountains, river rafting or rock climbing. Summer jobs may cover a range of
activities from delivering newspapers to working in a restaurant.
'000
Male
Female
TOTAL
as % of
total
population

1990
42,311
38,501
80,812
9.64

1995
44,932
40,986
85,918
9.31

2000
47,947
44,127
92,074
9.13

2005
53,651
49,528
103,179
9.47

2010
57,402
53,240
110,642
9.49

2015
59,638
55,489
115,126
9.29

Studying age (18-22 years old)

Source: Euromonitor International from national statistics and UN
5) YOUNG ADULTS
Young adults (15-29 years old) represent the largest spending segment in the country.
Youngsters are part of a middle-class boom in India. Of the US$30 billion spent by Indians on
themselves in 2003, young adults spent close to US$10.5 billion with their spending levels

rising 12% each year at twice the pace of the economys growth according to various trade
press publications. Young adults grew 8% in numbers over the 1999-2004 period and is likely
to grow at approximately the same pace.
Rising disposable incomes
College graduates and students still studying are landing well-paying jobs in a host of
emerging industries that barely existed at the start of the new millennium retail chains, fast
food restaurants, mobile phone companies, call centres and data processing firms. Many have
access to disposable incomes of Rs8,000-10,000 per month thanks to the BPO boom in India.
This age group still does not have responsibilities of running a household, marriage or worry
about their childrens education. Thus, this income is almost entirely spent on non-essential
items. Most purchases made by this age group are on impulse. There are 16 million urban
consumers in the 20-25 age group.
Need for convenience
Many single working professionals have to live away from their parents due to the demand of
the jobs. This yuppies (young upwardly mobile professionals) class has a hard time preparing
food and for them convenience is major issue. They are ready to pay a premium for quality
and convenience. Also always being on the move they have a need for food item that can be
easily consumed and disposed of.

'000
Male
Female
TOTAL
as % of
total
population

1990
120,916
109,923
230,839
27.55

1995
130,305
118,843
249,149
27.00

2000
141,223
129,353
270,576
26.83

2005
153,026
141,077
294,103
27.00

2010
165,790
153,477
319,267
27.38

2015
174,236
161,957
336,193
27.13

Young adults (15-29 years old)

Source: Euromonitor International from national statistics and UN
6) MIDDLE-AGED ADULTS
These middle aged men have strict preferences over food and they generally stick to their
choices. They experiment less and go for products that will enhance their social status.
The women in this age group are ones who the primarily buy food items for the entire
household though their choices are shaped by the preferences of the household members. The
women in this segment play an important role as most of the choices of food items have to
pass their scrutiny before it is consumed in the household.
Responsibilities
Between the ages of 45 and 55, men find themselves with children who are able to leave
school or facing crucial board examinations. Some may also have wives with settled careers.
These factors make them reluctant to leave or move from their city of residence and they
would rather resign and move to another job rather than displace the family. Others find
themselves redundant in the new hire and fire labour environment. There is a trend for such
people to enter the BPO sector as well.

Mid-life career change

In urban India, among the middle class, there are a significant number of men who are making
career switches, some out of choice and others out of necessity. Tired of their current salaried
jobs, some are taking the entrepreneurial plunge, setting up businesses such as small ITservice firms, adventure tourism companies or leadership training consultancies.
'000
Male
Female
TOTAL
as % of
total
population

1990
125,217
118,079
243,295
29.03

1995
143,223
134,120
277,343
30.06

2000
163,764
152,300
316,065
31.34

2005
186,055
172,109
358,164
32.89

2010
206,920
191,486
398,405
34.16

2015
228,338
212,317
440,655
35.56

Middle-aged adults (30-59 years old)

Source: Euromonitor International from national statistics and UN

7) BABY BOOMERS
The concept of baby boomers may not be that relevant to India notwithstanding the impact of
and its participation in World War II. This generation has virtually seen it all right from
Indian Independence (1947) to the Indo-Pakistan war (1965). However, having been born in
an age of constrained resources, this segment is somewhat cautious about its approach to
consumerist tendencies although it is adopting some of them. For example, a number use
mobile phones for their functional use but frown on the use of credit cards and buying
branded clothing.
Health-related products, childrens education, automobiles, retirement planning, insurance
products and vacations form the bulk of their expense.
'000
Male
Female
TOTAL
as % of
total
population

1990
68,010
66,202
134,212
16.02

1995
77,278
74,368
151,646
16.43

2000
89,882
85,105
174,986
17.35

2005
104,720
98,034
202,754
18.62

2010
120,490
112,310
232,801
19.96

2015
135,142
126,207
261,349
21.09

Baby boomers (40-59 years old)

Source: Euromonitor International from national statistics and UN

8) PENSIONERS
In the 1950s and 1960s, government jobs were among the few acceptable job occupations for
people from respectable households. Changing technology and globalisation have changed
that with unconventional income opportunities now presenting themselves to Indians. Some
pensioners have sought and enjoyed success in information technology-related endeavours
whilst others have put their considerable English language skills to good use in service
industries. Pensioners have been the hardest hit section of the population. With declining
interest rates, they have had to play a more active role in financial management. Some of

them are even trying to keep abreast of current happenings and learning how to use a
computer or access the Internet.
There food preferences are shaped by their health conditions and they stick to their preferred
food items.
Independent living on the rise
From the 1980s onwards, there has been a steady migration of young adults and students to
the US, in search of better opportunities. Most have chosen to settle and make their lives in
that country. Therefore, their ageing parents have had to learn to continue to live
independently.
Retirement communities viewed as an option
Retirement homes were previously viewed negatively in India. If the elderly went there, it
meant they had no one to care for them, and were in a sense for the destitute elderly. In the
new urban India, however, well-appointed retirement communities are mushrooming, and
couples in their 60s are going there of their own volition.
While the numbers are not yet significant, a trend is likely to increase in line with growth in
the numbers of Indias elderly. It is also now an option for the middle-income and salaried
classes. In families where there is a proprietary business, or a family practice, two-to-three
generations will continue to live together.
'000
Male
Female
TOTAL
as % of
total
population

1990
28,085
28,944
57,029
6.81

1995
31,905
33,737
65,643
7.11

2000
36,292
39,420
75,712
7.51

2005
41,109
45,476
86,585
7.95

2010
47,286
52,441
99,728
8.55

2015
55,928
61,240
117,168
9.45

Pensioners (aged 60+)

Source: Euromonitor International from national statistics and UN

3.4 TARGET SEGMENTS FOR MAGGI NOODLES

3.4.1 MAGGI 2 MINUTE NOODLES
Maggi 2 Minute Instant Noodles is already associated with convenience and taste and is
currently accepted as a valid filling snack between meals. Maggi will continue to leverage its
brand equity and target the following segments for this product.

Children and Tweenagers: This is a large segment and is Maggis stronghold. The
age group between 4 and 14 years has largely similar tastes and is traditionally
targeted by Maggi. These segments perceive Maggi instant noodles as a welcome
change in taste from the regular Indian fare and they are fascinated by the curly
shaped noodles. For these segments innovative products also have novelty value,
however, certain dominant preferences emerge. Realizing this early, Maggi shifted
focus from the lady of the house to the end consumer i.e. children themselves ending
up as the market leader of the instant noodles segment. Early buy in of this segment
will help Maggi to sell in other segments in future.

Studying Age: The studying age segment though not traditionally targeted
specifically has been devouring Maggi 2 minute noodles. The proposition of
convenience of cooking as well as that of a tasty filling snack attracts this segment
which due to erratic schedules keeps missing their regular meals.

3.4.2 MAGGI CUP O NOODLES

Maggi Cup O Noodles is Maggis answer to Nissins Cup Noodles. With reduced cooking
time of a minute, ease of preparation and no need of separate plates Maggi Cup O Noodles
promises to appeal to anyone in need of a quick, convenient bite. Maggi Cup O Noodles being
a premium priced product, the segment targeted should one which is ready to pay a premium
for a quality convenient food. The following segment promises to be the best bet.

Young Adults: The growing class of affluent young adults does not mind paying
higher prices for quality products. They are hard pressed for time and would pay
a premium for convenience. This segment has a good top of the mind recall of
Maggi as a brand as the current members of this group were the targets of Maggi
in the 1980s and they retain fond memories of Maggi, a emotional bond which
can be leveraged to win them over to Maggi Cup O Noodles. This segment is
growing and has the potential of accepting Maggi as a mainstream food item as
they see instant noodles as a natural part of Indian food culture.

3.5 POSITIONING OF MAGGI

3.5.1 MAGGI 2 MINUTE NOODLES
Maggi 2 Minute Noodles will continue with its current positioning of convenience and as a
fast to cook, good to eat snack as this seems to be working well. To prevent Top Ramen,
the main competitor, from eating into its market share some product innovation is required as
otherwise Maggi may get stereotyped as an unexciting product.
Top Ramen is following a cost differentiation technique. To deal with this Maggi has to
position itself as a differentiated product. The market is very sensitive to taste and rejects any
flavour it dislikes with Maggi having learnt it the hard way, thus the product can not be
greatly differentiated with on basis of taste. On the other hand Maggi has to deal with the
negative perception of Maggi has of being unhealthy in an increasingly health conscious
market, a major threat in the current scenario. Both these problems can be tackled by
positioning Maggi as a snack with nutritional value. The recent launch of Veg Atta Noodles
and Dal Atta Noodles with the promise of good nutritional value ventures in this area.
Another
3.5.2 CUP O MAGGI
The main USP of Cup O Maggi is convenience without compromising on taste. Nissins Cup
Noodles is a huge hit with the consumers liking the concept of noodles served in a cup and the
extra convenience of not dealing with cleaning/needing plates and the lesser time required for
preparation. Cup O Maggi is targeted towards a segment that values time and convenience as
well as is getting increasingly health conscious. So Cup O Maggi with added nutrition and
wholesome components will position itself as a healthy and convenient food option that can
be had anywhere, anytime. The crux of positioning will be Healthy Snack Anywhere,
Anytime.

4. MARKETING MIX
4.1 CONSUMER SOLUTION
The instant noodles segment of Maggi is the market leader in its segment. Available in 4
flavours, the Masala flavour is the hot favourite by a huge margin followed by Maggi
Vegetable Atta and Tomato flavour. The Maggi Dal Atta variant shows a poor response.
4.1.1 IMPROVING THE DAL ATTA VARIANT
Maggi Dal Atta variant ranks really low on taste as suggested by the Marketing Research
Survey. The existing Sambar taste doesnt go too well with consumers even from the south
Indian market. For which we plan to replace the existing Tastemaker with a Spicier
Tastemaker to go with the traditional Spicy Indian taste.
4.1.2 NEW PRODUCT: THE CUP-O-MAGGI
Maggi is market leader in its segment but it still has no product to challenge the growing
threat posed by Cup Noodles from Top Ramen, its closest competitor. The cup noodle market
is expanding rapidly and there is a huge scope for gaining further market share by entering
this segment which is currently dominated by Top Ramen. To challenge this threat we
propose to launch a new product to directly compete in this segment with the name Cup- O
Maggi.
Features of Cup O Maggi

To be made available in two flavours Masala and Chicken to cater to the overall
market palate.
The noodles will be available in a Plastic cup and just require hot water to be added to
prepare them. This is to capture the market which has a growing demand towards
convenience foods.
Dried Vegetables and Dried Chicken chunks to be made available inside the cup
The new improved spicier Tastemaker also to be added to the cup

The Market Research Survey importuned us to improve the taste and provide better health
benefits. For this purpose the improved Tastemaker has been added to Cup-O-Maggi. To cater
to the demands of the growing health conscious people nutritious veggies and chicken chunks
have also been added. These extra pieces are already available with the Maggi range of soups
and the same can be used in Cup-O-Maggi also thus dispenses the need for setting up of a
new processing factory specially for the manufacturing of food pieces.
4.1.3 PACKAGING
Major changes are required in the packaging of Maggi noodles as suggested by the Marketing
Research Survey:

Maggi noodles packets to be flimsy which require to be torn apart carefully so as to

not spill the contents.
Another issue is with the multi brick packets. Once opened they cannot be stored as it
is and the contents have to be transferred to another container.

To counter the problem, we plan to

Increase the thickness of the plastic sheets used in the Maggi Noodles packets to give
more strength to the packet and allow easy & safe opening of the pack
To provide a Zip-Seal facility along with the existing sealing to allow the packets to
be stored easily

4.2 CONSUMER COST

Pricing strategy for the existing variants of Maggi Noodles is based on the objective of
Maximising Market Share. These variants are competitively priced. As the segment is
highly price sensitive, any price change initiates an instant price check reaction from the
competitor.

MAGGI 2 Minute Noodles

Pack Size Current

(gm)
(Rs)

Masala

50

100

10

10

200

20

20

400

38

36

600

54

54

800

72

72

Chicken

100

10

10

Curry

100

10

10

Tomato

100

10

10

Vegetable Atta Noodles

100

13

13

400

50

50

100

13

13

400

50

50

Vegetable Dal Atta Noodles

Price Revised
(Rs)

Price

Maggi 2 Minute Noodles Proposed Revised Prices for existing package sizes
Reducing the price of the 400g pack of Maggi Masala is a very aggressive move to directly
attack the competitor whose 400g variant is priced at Rs 34. The effect of the downward
revision in price can be offset by the increase in sales volume.
Pricing strategy for the launch of Cup-O-Maggi is based on the objective of achieving
Product Quality leadership. Its segment is less price-sensitive so it will be premium priced
to target the higher end customers. Creation of a premium brand gives the company an
opportunity to provide a differential pricing and service offering to the customer thereby
creating a key differentiator.

CUP-O-MAGGI
Masala
Chicken

Pack Size (gm)

80
80

Price (Rs)
20
20

Cup O Maggi Proposed Pricing and Packaging

Product pricing is based on offering high value to our customers compared to most price
points in the market. Thus using the Competitive- Parity method, Cup-O-Maggi has been
priced at Rs 20 for an 80g pack of Masala and Chicken flavours to directly compete against
the competitor cup noodles which are also priced at Rs 20 for an 80g pack.
The pricing will be regularly revised according to the changing forces in the market
environment.

4.3 CONVENIENCE
To keep up with the growing trends in the Noodles sector, an intensive dealer-distributor
network is desired. Maggi has a well established distribution network. As of now, the strength
of our already robust distribution network could be leveraged to introduce and sell our new
product: Cup-o-Maggi noodles, as also the improved versions of the Dal Atta variant. The
target markets of Cup-o-Maggi are primarily present in the metropolitan cities as well as the
tier-II cities.
In addition for Cup O Maggi we propose that:
Maggi Noodles have tie-ups with Corporate Houses
Depending on the initial sales of Cup O Maggi, introduce vending machines for the
same at schools, colleges as well as corporate houses.

4.4 COMMUNICATION
PROMOTION OF CUP O MAGGI
With the introduction of Cup-o-Maggi noodles, we propose to move away from the Child
and Mother approach of Maggi. The Cup noodles would be targeted at the young single
professionals, as also the housewives, basically people who might prefer to go for a quick
meal instead of cooking a whole traditional Indian meal, specially in case of early work-day
mornings or a tired-evening quick snack (in case of professionals). An associated tagline
with the Cup-o-Maggi advertisement campaign could be: Cup-o-Maggi: Healthy Snack
Anywhere, Anytime!
SUGGESTED FUTURE CUP O MAGGI ADVERTISING CAMPAIGN
World Cup 2007 (13th March 2007 to 28th April 2007)
Families, couples, kids all enjoying their cricket with Cup O Maggi; at home, drive-in
screens. Get a cricketer to endorse Maggi noodles.

GENERAL PROMOTION
Events and Experiences: Hold the Online Maggie Recipe Challenge, wherein innovative
recipes with Maggi Noodles as a base are invited. Winning entries are compiled into an ecookbook which is published online.
Celebrity endorsement: Maggi has associated itself with celebrities like Bollywood actress
Priety Zinta recently. The reason being Maggi has always been the kids snack. The same is
brought out and highlighted in the charms of Preity and her bubbly and vivacious zing, with
which she portrays the brand that is Maggi.
Television Advertisements: Portraying hassled double income families, finding relief at the
end of a tiring day with a quickly conjured up bowl of Maggi 2 Minute noodles. Portray
different flavours available and focus on the health aspect of the fortified 2 minute Noodles
and the Dal and Vegetable Atta Noodles. Communicate the new improved east-to-use
packaging and the going spicy of Dal Atta Noodles.

4.5 MARKETING RESEARCH

An online survey was undertaken at http://www.createsurvey.com/c/39191-OSMZz4/
The following sections deal with the results obtained on the basis of the 30 point
questionnaire put forth in the survey.

4.5.1 Maggi Noodles Performance on various attributes

1400
1200
1000
800
600
400
200

B
ra
nd

Im
ag
e
Pr
ic
e
T
Pa as
c k te
ag
in
H g
e
A
va alt
ila h
In
gr bili
ed ty
ie
n
Va ts
rie
ty

4.5.2 Attributes on which Top ramen smoodles performs better then Maggi
noodles

Ingredients
Packaging

No. of people ranking Top

Ramen smoodles better
then Maggi noodles

Taste
Price
0

20

40

60

80

100

120

140

4.5.3 Attributes on which Top ramen cup noodles performs better then Maggi noodles

Ingredients
Convenience in
cooking
Packaging
Taste
0

20

40

60

80

4.5.4 Maggi Packaging size preference

800 gms
600 gms
400 gms
200 gms
100 gms
50 gms
0

0.1

0.2

0.3

0.4

0.5

100

120

4.5.5 How do you like to consume your Maggi ?

11.02%
6.82%
43.31%

Plain maggi
With vegetables
With chicken

38.85%
Your secret
recipe

5. FINANCIALS
5.1 BREAKEVEN ANALYSIS OF A 100 TONNE CAPACITY PLANT
OF CUP O MAGGI NOODLES
In this analysis we will look for the different costs involved in the production of Maggi cup
noodles and then comparing it with the total sales to find out the minimum efficiency at which
the plant should operate in order to have a neither loss nor profit relationship. This is done by
finding the Break-Even point of operation. If the plant operates at the efficiency higher than
that indicated by the Break-Even point than the plant operates at a profit and vice-versa.

5.1.1 BREAK-EVEN ANALYSIS

The cost involved in the production can be divided into two categories viz. fixed cost and
variable cost. They can be defined as
Fixed cost: This is the cost which is independent of the quantity of the product produced e.g.
Land &Building cost, plant & Machinery cost etc.
Variable Cost: this is the cost that varies with per unit of product produced e.g. Raw material
cost, packaging cost etc.
The break up of the various costs is shown below

1. Fixed Cost
A. Land and Building
A plot of land of about 200 sq.mtrs. with built-up area of 100 sq.mtrs. is sufficient. Land
would cost around Rs.60,000/- whereas cost of construction could be Rs.2.50 lacs. Main
production area would occupy around 50 sq.mtrs. whereas packing room and storage area
would occupy balance area.
Particulars
Land
Building

Area (sq. mtrs.)

200
100
TOTAL

Cost (Rs.)
60,000
2,50,000
3,10,000

B. Plant and Machinery

Marketing is the key success determinant and the production capacity has to be finalized
accordingly. Keeping in mind the financial viability, the rated production capacity is assumed
to be 100 tonnes per year with 300 working days and 2 shifts per day.

This would necessitate installation of following machines:

Item

Qty.

Price (Rs)

Extrusion Machine
Pre-conditioner
Mixer ( 50 kgs capacity)
Pouch Packing and Sealing
Machine
Weighing Scale

1
1
1
1

1,00,000
80,000
1,00,000
1,00,000

1
TOTAL

10,000
3,90,000

C. Miscellaneous Assets
Other assets like furniture and fixtures, storage facilities, working tables, SS utensils, etc.
would call for expenditure of Rs. 50,000/-.
D. Utilities
Power requirement shall be 20 HP whereas per day water requirement would be 500-550
liters. Annual expenditure at full capacity utilization will be Rs. 1,10,000/-.
2. Variable costs

A.MANPOWER REQUIREMENTS
Particulars

Nos.

Monthly
Salary (Rs)

Total Monthly
Salary (Rs)

Machine Operators
Skilled Workers for
Packing
Semi-skilled Workers
Helpers
Salesman

2
2

4,000
3,000

8,000
6,000

2
2
2

2,000
1,000
2,000
Total

4,000
2,000
4,000
24,000

B. Raw and Packing Materials

Noodles are made with the help of many ingredients with major input being wheat flour.
Other materials required are corn and rice flour, protein isolates, salt, spices, edible oil,
preservatives etc. All of them are easily available. Packing materials are equally important.
Colourful and attractive pouches shall have to be printed and outer packing will be corrugated
boxes.

This cost can be shown as

Product

Qty.
(Tonnes)

Price/Ton
(Rs.)

Value

Raw Material

100

70,000

70,00,000

Packing Material

100

@ Rs.20,000/ Ton of
Finished Goods
Total

20,00,000
90,00,000

C. Selling Expenses
Marketing will be a key element. Expenses shall have to be incurred on transportation,
Publicity in local media like newspapers, hoardings and TV scroll, selling commission, free
Sampling etc. A provision of 30% of sales value is made every year to take care of these
Expenses since the product is new thus more emphasis is given on this section. This expense
can be reduced once the product is well established in market.
FINAL TOTAL COST ANALYSIS
FIXED COSTS
Land and Building

In Rs.
3,10,000

Plant and Machinery

3,90,000

Miscellaneous Assets

50,000

Utilities

1,10,000

TOTAL FIXED COST

VARIABLE COSTS
Manpower Requirements
Raw and Packing Materials

8,60,000
Per tonne of production
24,000
90,000

Selling Expenses

@ 30% of Total sales

5.1.2 ANALYTICAL BREAK-EVEN ANALYSIS

Let total production be X tones. Since the 80 gm pack of Maggi is available for Rs.20 i.e.
Rs.250/kg so lets say that Maggi Noodle is supplied to the market agent at Rs. 180/kg
So for no profit no loss equation is
860000+ (1,14,000*X) + (30/100)*X*1000*180= (180*X*1000)
860000 = (180000-114000-54000)*X
X = 71.66 tonnes

Final conclusion: The plant must operate at the minimum efficiency of 71.66% in order to
reach break-even analysis point i.e. not to suffer any loss.
5.1.3 GRAPHICAL BREAK-EVEN ANALYSIS

The result obtained above can be verified by plotting a graph between the total cost and
Quantity of Maggi produced. The graph is shown below.

Break Even Analysis

Rupees (in millions)

20
15
10

Variable Cost
Revenue
Cash Balance

5
0
0

20

40

60

80

100

120

-5
Sales (in tonnes)

5.2 SALES FORECAST

5.2.1 MAGGI INSTANT NOODLES
Sales by value

For the year 2007 Projected value of instant noodles category (Refer Appendix B)= Rs.
8,611.1 million
The desired market share by value = 80%
Therefore, projected value the sales need to be 80% * Rs.8611.11 = Rs. 6888.88 million.
Sales by volume

Average retail price per 100 gms of Maggi (across all SKUs) = Rs.9
Price for one thousand Tonnes of Maggi = 9 * 10^7 rupees
Projected value of sales = Rs. 6888.88 million
Therefore, Projected volume sales = (Projected Value of Sales / Price per thousand Tonnes)
= 76.5 thousand Tonnes.
For year 2007 projected category sales = 96.9 thousand Tonnes.
Therefore, volume market share of 78.95 % for the year 2007 is projected.

5.2.2 PROPOSED : CUP O MAGGI NOODLES

Sales by value

For the year 2007 Projected value of cup noodles category (Refer Appendix B) = Rs. 143.1
million
The suggested target market share by value = 20%
Therefore, projected value the sales need to be 20% * Rs.143.1 = Rs. 28.62 million.
Sales by volume

Suggested retail price per 80 gms of Cup O Maggi = Rs.20

Price for one thousand Tonnes of Cup O Maggi = 20 /80* 10^9 rupees
Projected value of sales = Rs. 28.88 million
Therefore, Projected volume sales = (Projected Value of Sales / Price per thousand Tonnes)
= 0.115 thousand Tonnes.
For year 2007 projected category sales = 0.6 thousand Tonnes.
Therefore, volume market share of 19.17 % for the year 2007 is projected.

APPENDIX A: INDIAN INSTANT NOODLES MARKET

GROWTH GRAPHS
Indian Instant Noodles Market Retail volume growth trends

Indian Instant Noodles Market Retail value growth trends

APPENDIX B: NESTLE MAGGI NOODLES FORECAST

RETAIL SALES
Nestl India Ltd Shares of Packaged Food by Subsector 2001-2004
% retail value
rsp

Instant noodles

2001
79.3

2002
77.3

2003
78.1

2004
78.5

Forecast Retail Sales of Noodles by Subsector: Value 2005-2010

Rs million

Instant
noodles
Cups/bowl
instant
noodles

2005
6,077.5

2006
7,300.6

2007
8,611.1

2008
9,959.2

2009
11,319.4

2010
12,667.3

84.8

112.6

143.1

175.2

206.8

237.6

Forecast Retail Sales of Noodles by Subsector: Volume 2005-2010

'000
tonnes

Instant
noodles
Cups/bowl
instant
noodles
Source:

2005
59.9

2006
71.6

2007
84.0

2008
96.9

2009
110.1

2010
123.1

0.3

0.5

0.6

0.8

0.9

1.1

Trade press (The Economic Times, The Hindu Business Line, Financial Express, Business Standard, India
Infoline, agencyfaqs.com, Mid-day, rediff.com), Company research, Trade interviews, Euromonitor
International estimates